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B Com Exam  >  B Com Tests  >  Test: Depreciation - 1 - B Com MCQ

Test: Depreciation - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Depreciation - 1

Test: Depreciation - 1 for B Com 2024 is part of B Com preparation. The Test: Depreciation - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Depreciation - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Depreciation - 1 below.
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Test: Depreciation - 1 - Question 1
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Which factor is not typically a cause of depreciation?

Detailed Solution for Test: Depreciation - 1 - Question 1
Depreciation is related to the asset's value decreasing due to wear and tear, time, and obsolescence, not temporary changes in market prices.
Test: Depreciation - 1 - Question 2
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Which method of depreciation charges an equal amount of depreciation each year?

Detailed Solution for Test: Depreciation - 1 - Question 2
The Straight Line Method allocates an equal amount of depreciation to each year of the asset's useful life, making it simple to calculate and apply.
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Test: Depreciation - 1 - Question 3
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What term is used for writing off the cost of intangible assets?

Detailed Solution for Test: Depreciation - 1 - Question 3
Amortisation pertains to the gradual write-off of the cost of intangible assets like patents and copyrights over their useful lives.
Test: Depreciation - 1 - Question 4
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Which of the following is an example of depletion?
Detailed Solution for Test: Depreciation - 1 - Question 4
Depletion specifically refers to the reduction of natural resources, such as the extraction of minerals from a quarry.
Test: Depreciation - 1 - Question 5
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If a machine's purchase price is Rs. 1,00,000, and the transportation and erection costs are Rs. 24,000, what is the total cost of the machine?
Detailed Solution for Test: Depreciation - 1 - Question 5
The total cost of the machine includes both the purchase price and additional expenses required to make it operational, totaling Rs. 1,24,000.
Test: Depreciation - 1 - Question 6
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Which method of depreciation charges higher amounts in the initial years?
Detailed Solution for Test: Depreciation - 1 - Question 6
The Diminishing Balance Method charges more depreciation in the early years, reflecting the higher utility and wear during those years.
Test: Depreciation - 1 - Question 7
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How is the estimated scrap value used in calculating depreciation?
Detailed Solution for Test: Depreciation - 1 - Question 7
The estimated scrap value, or salvage value, is subtracted from the asset's initial cost to calculate the total amount that will be depreciated over its useful life.
Test: Depreciation - 1 - Question 8
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What is the primary objective of providing for depreciation in accounting?
Detailed Solution for Test: Depreciation - 1 - Question 8
Providing for depreciation ensures that the cost of fixed assets is accurately reflected in the production costs and the financial statements, showing true profits.
Test: Depreciation - 1 - Question 9
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Why is it important to account for depreciation in the balance sheet?
Detailed Solution for Test: Depreciation - 1 - Question 9
Depreciation accounting ensures that the balance sheet reflects the actual, reduced value of fixed assets due to their usage and time.
Test: Depreciation - 1 - Question 10
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If a building leased for 10 years at Rs. 1,00,000 is depreciated annually, what is the annual depreciation?
Detailed Solution for Test: Depreciation - 1 - Question 10
The annual depreciation of the building is calculated by dividing the total lease amount by the number of years, resulting in Rs. 10,000 per year.
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